Quarterly Report "Interregional Distribution Grid Company of Centre", Joint-Stock Company Issuer’s code: 10214-A (стр. 40 )

2.6.5.7.  Cost of investments in non-current assets (fixed assets, intangible assets etc.), inventories and other assets is accepted in estimate in rubles at the rate existing for the date of fulfillment of the transaction in foreign currency as a result of which these assets are accepted to accounting. Recalculation of cost of the transferred assets after their acceptance to accounting in connection with change of the rate is not carried out.

2.6.5.8.  Exchange rate difference is reflected in accounting and accounting statements in that accounting period, to which the date of fulfillment of obligations on payment is related to, or for which the accounting statements were drawn up.

2.6.5.9.  Exchange rate difference is subject to booking to financial results of the Company as miscellaneous income or miscellaneous expenses.

2.6.5.10.  Exchange rate difference connected with settlements with founders under contributions, including to the authorized (share) capital of the organization is subject to booking to the additional capital of the Company.

2.7.  Chosen methods of accounting for financial investments

2.8.1.  The assets, which are do not have tangible physical form and capable to bring economic gains (income) in the future in the form of interests, dividends or increase of their value (in the form of difference between sale (redemption) and purchase price) as a result of their currency, use at redemption of obligations, increase in current market cost are recognized to be financial investments of the Company.

2.8.2.  The financial investments of the Company include:

·  securities (state, municipal, securities of other organizations, including bonds and bills);

·  contributions in the authorized (share) capitals of other organizations (including subsidiaries and dependent business companies);

·  contributions under simple partnership agreements (joint activity);

·  loans granted to another organizations;

·  deposits in credit organizations;

·  accounts receivable acquired on the basis of cession of the right of demand, except for accounts receivable acquired under the contracts for accounts receivable acquired on the basis of cession of the right of demand as mean of payments which are not intended to economic profit(imcome) etc.

2.8.3.  The bills issued by buyers of the goods, works or services of the Company, which were received from the drawer of the Company at settlements for this goods, works or services, are not recognized as financial investments and are reflected in the accounting and reports as accounts receivable of buyers and customers secured by bills received.

2.8.4.  Financial investments are divided by the Company into individually determinable and undeterminable. Investments, the unit of which has own individual distinctive attributes: Series and number of securities, details of the organization, in the authorized capital of which the Company makes investments, details of simple partnership agreements, loan, deposits, acquisition of the rights of demand etc. are recognized to be individually determinable investments. Investments, the unit of which has not own individual, but fungible distinctive attributes - details of the issue of uncertificated shares etc. are recognized to be individually undeterminable investments.

2.8.5.  Accounting unit of financial investments is:

·  for individually determinable financial investments - separate investment (securities, contribution to the authorized capital of the separate organization, the separate simple partnership agreements, loan or deposit issued by the separate contract, rights of demand acquired under the individual contract etc.);

·  for individually undeterminable financial investments - a block of securities. A block of securities is a set of securities of one issue (that is of one issuer, one type, term of the circulation, par value etc.) acquired by the Company as a result of one transaction.

2.8.6.  The analytical account of financial investments is conducted in relation of short-term and long-term financial investments. The investments made with intention to receive income on them during more than one year are related to long-term financial investments. Other financial investments are short-term.

2.8.7.  In the accounting statements financial investments should be represented with the division into the short-term and long-term depending on the term of circulation (repayment).

2.8.8.  Actual expenses for acquisition of financial investments are:

·  amounts paid to the seller according to the contract;

·  amounts paid to the organizations and other persons for the information and consulting services connected with acquisition of the specified assets.

·  remunerations paid to the intermediary organization or another person, through which assets are acquired as financial investments;

·  other expenses directly connected with acquisition of assets as financial investments.

2.8.9.  The expenses connected with implementation of financial investments by the Company:

·  are included in their cost, if they are made before or during the moment of accounting;

·  are written off to the structure of miscellaneous expenses, if they are made after the moment of accounting.

2.8.10.  For the purposes of the subsequent estimation financial investments are divided into two groups:

·  financial investments, under which it is possible to determine the current market value;

·  financial investments, under which their current market value is undeterminable.

2.8.11.  Financial investments in the securities circulating in the share market (stock exchange, auction), quotations of which are published on a regular basis, are related to financial investments, under which it is possible to determine current market value. All the others are related to financial investments, under which current market value is undeterminable.

2.8.12.  Financial investments, under which it is possible to determine the current market value in accordance with the established procedure, are reflected in the accounting statements as of the end of the accounting year at the current market value by means of updating their estimation for the previous accounting date. The Company makes the specified updating quarterly.

2.8.13.  The difference between estimation of financial investments at the current market value for the accounting date and previous estimation of financial investments is recognized by the Company as miscellaneous income or expenses. Thus, the gain of market value of investments is reflected under the debit of the account "Financial investments" and credit of the account "Miscellaneous income or expenses", decrease - on debit of the account "Miscellaneous income or expenses" and the credit of the account "Financial investments".

2.8.14.  In case the current market value is not determinable on the item of financial investments estimated earlier at current market value at the accounting date, such item of financial investments is reflected in the accounting statements at the value of its last estimation.

2.8.15.  Financial investments, under which the current market value is not determinable, are reflected in the accounting statements at the initial value.

2.8.16.  Ther initial value of financial investments acqired for payment is the amount of actual expenses of the organization for their acquisition, excluding VAT and other indemnifiable taxes (except for cases provided by the Law on taxes and duties of the Russian Federation). General business and other similar expenses are not included in actual expenses for acquisition of financial investments, if they are not directly connected with acquisition of financial investments.

2.8.17.  At retirement of assets accepted to the accounting as financial investments, under which the current market value is determinable, their value is determined by the Company basing on the last estimation.

2.8.18.  At retirement of financial investments, under which the current market value is undeterminable, their value is determined as follows:

·  investments to authorized capitals of other organizations (except for actions of joint-stock companies), loans granted to other organizations, deposits to the credit organizations, accounts receivable acquired on the basis of cession of the right of demand, are estimated at the initial value of each retired financial investments provided;

·  securities (shares and bonds) are estimated at retirement at the average initial value, which is determined under each type of securities;

·  purchased bills are estimated at retirement (payment for performed works, (goods, works, services)) under the prime cost of a unit;

·  other financial investments - under the initial prime cost of each retired unit.

2.8.19.  Income on financial investments is recognized by the Company as miscellaneous income.

2.8.20.  Expenses connected with granting to other organizations of loans, with servicing of financial investments of the Company, payment of services of bank and/or depositary for storage of financial investments, granting of an extract from the account of depot etc.) are recognized as miscellaneous expenses.

2.8.21.  In the case of a situation, which may occur impairment of investments, the Company shall check the availability of conditions for sustained depreciation of investments.

If the impairment test confirms sustained significant reduction in value of investments, the organization makes provision for impairment of financial investments on the value of the difference between the carrying value and estimated value of such investments.

2.8.  Specifications of accounting for transaction under simple partnership agreement

2.9.1.  Under simple partnership agreement (the contract of joint activity), two or several persons (partners) undertake to join their contributions and operate together without formation of legal entity for deriving profit or achievement of another purpose, which does not contradict the law.

2.9.2.  The contribution to simple partnership is recognized in the accounting as financial investments. The property brought as the contribution under the contract of joint activity (simple partnership agreement) is included by an organization-partner in financial investments at the balance cost of as of the date of the contract coming into effect.

2.9.3.  Acknowledgement of the fact of reception of the property contribution for an organization-partner is the notification (letter of advice) about acceptance to accounting of property by a partner holding general business, or the primary accounting document of reception of property (acceptance and transfer certificate, consignment notes, payment documents etc.).

2.9.4.  When forming financial result, each organization-partner includes its share of profit or losses subject to reception as a result of joint activity in miscellaneous income or expenses.

2.9.5.  The property subject to reception by each organization-partner following the results of partition, according to Art. 1050 of the Civil Code of the Russian Federation, at termination of joint activity is reflected as redemption of the contributions accounted in the structure of the financial investments. In case of difference between the contribution cost estimate accounted in the structure of financial investments and cost of the assets received after termination of joint activity, it is included in miscellaneous income or expenses at formation of financial result. The assets received by an organization-partner after termination of joint activity are accepted to accounting at the estimate, which is registered in separate balance sheet for the date of decision relating to termination of joint activity.

2.9.  Chosen methods of accounting for internal funds (capital)

2.10.1.  Own capital of the Company includes:

·  authorized capital;

·  reserve capital;

·  additional capital;

·  net (undistributed) profit;

·  other reserves.

2.10.2.  The Company does not reduce the amount of the authorized capital reflected in its reports, by the amount of unpaid capital: authorized capital and actual debts of founders under contributions to the authorized capital are reflected in the accounting statements separately.

2.10.3.  All changes of the amount of the authorized capital (including designation of funds of the additional capital to increase of the authorized capital) are reflected in the accounting statements of the Company only after respective alterations in its constituent documents.

2.10.4.  The reserve capital is formed by the Company of its profit on the basis of constituent documents and resolution of founders (shareholders) of the Company. The reserve capital is intended for covering of possible losses as well as for the redemption of shares of the Company, if there are no other funds.

2.10.5.  The additional capital of the Company consists of increase in value of its property from its reassessment and from the issue income.

2.10.6.  The expenditure of the additional capital is carried out separately. The amounts of increase in value of property from reassessment are used for write-down of those items of property, which earlier were exposed to final appraisal, and only within the amounts accumulated on each separate inventory item. The issue income is used by the decision of shareholders meeting (upon termination of a year) as a source of covering of probable losses from activity of the Company.

2.10.7.  The undistributed profit is spent by the Company for the following purposes:

·  write-down of non-current assets of the Company over the amounts of the additional capital (accumulated on the given inventory item of final appraisal);

·  the purposes defined by founders (shareholders) of the Company including payment of dividends, financial maintenance of production development and other similar actions on acquisition (formation) of new property etc.

2.10.Chosen methods of accounting for accounts RECEIVAble

2.10.1. In the event that receivables are recognized as doubtful the Company establishes an allowance for doubtful debts with correlation of such amounts of reserves on the financial results.

2.10.2. Accounts receivable of the Company are considered doubtful, which have not been canceled, or with high probability will not be repaid within the periods specified by the contract and not provided with appropriate safeguards.

2.10.3. The Company establishes an allowance for doubtful accounts based on the inventory of receivables.

2.10.4. Provisions are determined separately for each bad debt, depending on the financial condition (solvency) of the debtor and the evaluation of the likelihood of debt repayment in whole or in part.

2.10.5. On disposal of the (settlement) in accounts receivable the appropriate amount of reserve is debited. Reserve amounts written off are recognized as other income of the Company.

2.10.6. As the recognition of bad debt for which a provision was made, the amount of thic bad debt is to be written off from the balance of the Company to reduce the reserve (recorded to reduce the balance on the account "Provision for doubtful debts" and a corresponding decrease in receivables). With the recognition during the year in bad debt in receivables for which the provision for doubtful debts was not created, the reserve for doubtful debts is not credited additionally, and the amount of bad debt is classified as other expenses.

Similarly, if the amount of bad debt exceeds the amount by which the reserve was established for doubtful debts for these receivables, the reserve is not credited additionally, and the excess is recorded as other expenses.

If by the end of the year following the year of a provision for doubtful debts, the reserve in any part will not be used, the unspent amount will be attached to other income at the end of the year as other income.

Debt relief for a loss due to insolvency of the debtor is not a cancellation of debt. This debt should be reflected in the balance sheet within five years from the date of cancellation to monitor the possibility of its recovery in case of change of the debtor's property status.

2.11.  Chosen methods of accounting for liabilities (accounts payable)

2.11.1.  The Company recognizes debts, which are consequence of the certain actions or inactivity in relation to another person (creditor) and connected with the demand to transfer monetary funds, property, to perform works or services, to make other actions in favor of this person (creditor) arising by virtue of the contract, the law or another rule of law as well as customs of business practice, to be liabilities.

2.11.2.  Liabilities of the Company are divided into:

·  debts to suppliers of the goods, works, services;

·  debts to the budgetary and non-budgetary funds;

·  debts to employees on wages;

·  debts to buyers on the received advance payments;

·  debts on the received borrowed funds (credits and loans);

·  other debts.

2.11.3.  The accounts payable to suppliers of the goods, works, services are accounted in the amount of the accounts accepted for payment and amount of the accrued liabilities according to settlement documents.

2.11.4.  As a separate kind of the liabilities accounted on independent accounts, the Company recognizes debts on the received borrowed funds (on loans and credits).

2.11.5.  The debts on credits and loans are divided into:

­  long-term and short-term:

short-term debts are debts on the received loans and credits, the term of redemption of which according to contract conditions does not exceed 12 months;

long-term debts are debts on the received loans and credits, the term of redemption of which according to the contract conditions exceeds 12 month;

­  due and overdue:

due debts are debts on the received loans and credits, the term of redemption of which under contract conditions has not come or is extended (prolonged) in accordance with the established procedure;

overdue debts are debts on the received loans and credits with expired term according to contract conditions for redemption.

2.11.6.  In case of conclusion of additional agreements to the contract, the short-term debt is transferred into the long-term one.

2.11.7.  The debts on the received loans and credits are estimated in view of due payment of interest according to the terms of the contracts as of the end of the accounting period.

2.11.8.  Expenses connected with reception and use of loans and credits (interest on the received loans and credits, interest, discount under bills and bonds, additional expenses under loans and credits as well as rate and sum differences concerning the interest due for payment under loans and credits), are recognized as miscellaneous expenses of the Company of the corresponding accounting period. Exception is expenses under loans and credits, which are subject to inclusion in cost of investment assets or in cost of other property.

2.11.9.  The additional expenses of the Company effected in connection with reception of loans and credits, issue and allocation of borrowed liabilities, include the following types of expenses connected with:

·  rendering of legal and consulting services (including audit on demand of the creditor) to the borrower;

·  performance of multiple copying works;

·  carrying out examinations;

·  consumption of services of communication;

·  other expenses directly connected with reception of loans and credits.

2.11.10.  In case the additional expenses in structure of the expenses connected with reception and use of loans and credits, are not related to increase in cost of the investment asset, the Company includes these additional expenses in the structure of miscellaneous expenses in that accounting period, within which they were effected (without its preliminary accounting as accounts receivable and uniform write-off to the miscellaneous expenses within the term of redemption of borrowed liabilities).

2.11.11.  At attraction of borrowed funds by means of issue by the Company of own bill the accounts payable are formed as follows:

·  at attraction of borrowed funds by means of issue of own interest bill providing accruing of interest, in the amount of actually received funds, which is equal to the bill amount. The interests accrued subsequently increase accounts payable till the moment of their payment to the creditor;

·  at attraction of the interest-free loan by means of issue of own bill - in the amount of actually received funds, which is equal to the bill amount. Within the whole term of the loan the amount of accounts payable does not change;

·  at attraction of borrowed funds by means of issue of own discount bill - in the amount of actually received funds and discount (the income subject to reception by the creditor at redemption of the bill by the borrower) it is equal to the bill amount. Within the term of the loan, the amount of accounts payable in this case also does not change (all incomes due to the borrower initially generated the amount of accounts payable). At issue of the bill for reception of the loan by means of monetary funds, the amount due to the holder for payment of interests or discount is included in miscellaneous expenses. These miscellaneous expenses are recognized by the Company at the moment of their accruing. The amount of interests due to payment is accrued for the expired month on the last working day of each month.

2.11.12.  Operational expenses on discounts and interests under bills are recognized by the Company at the moment of their accrual. The Company does not consider these expenses as expenses of future periods, the amount of discount due to payment is included in miscellaneous expenses at the moment of transfer of the bill to the payee (the first holder); the amount of interests due to payment is accrued for the expired month on the last working day of each month.

2.12.  Accounting of expenditures for profit tax

2.12.1.  Formation in accounting and procedure of disclosure of information on calculations under profit tax in the accounting statements is established according to RAS 18//02 "Accounting of expenditures for profit tax".

2.12.2.  Difference between the accounting profit (loss) and taxable profit (loss) of the accounting period, which was formed as a result of application of various rules of recognition of income and expenses established in regulatory legal acts on accounting and the law of the Russian Federation on taxes and duties, consists of constant and temporary differences.

2.12.3.  Permanent difference (PD) - income and expenses forming accounting profit (loss) of the accounting period and excluded from the calculation of tax base either of the accounting, so subsequent period. PD leads to formation of the permanent tax liabilities (PTL), which is determined as product of the constant difference arisen in the accounting period, for the rate of profit tax.

2.12.4.  For the purposes of formation of accounting and tax profit, the following constant differences are accepted:

·  expenses for payment effected over the expenses regulated by Art. 255 of the Tax Code of the Russian Federation, and the expenses, which are not accounted with a view of the taxation according to Art. 270 of the Tax Code of the Russian Federation;

·  expenses for the voluntary insurance effected over the expenses regulated by Art. 255 and Art. 263 of the Tax Code of the Russian Federation;

·  expenses for non-state pension provision effected over the expenses regulated by Art. 255 of the Tax Code of the Russian Federation;

·  interests under the promissory notes paid over the interests recognized for the purposes of taxation of the interests (Art. 269 of the Tax Code of the Russian Federation).

·  expenses connected with gratuitous transfer of property (goods, works, services) in the amount of the cost of property and expenses connected with their transfer (par. 16. of Art. 270 of the Tax Code of the Russian Federation);

·  representative expenses effected over the expenses regulated by Art. 264 of the Tax Code of the Russian Federation;

·  expenses for advertising effected over the expenses regulated by Art. 264 of the Tax Code of the Russian Federation. Application of the different procedure of recognition of the income of the gratuitously received property for the purposes of accounting and purposes of taxation (par. 4 of the subparagraph 1 of Art. 271 of the Tax Code of the Russian Federation);

·  profit (loss) connected with the difference between estimated cost of property at its entering in the authorized capital of another organization and the cost, at which this property is reflected in the accounting balance sheet by the transferring party (par. 1 of Art. 277 of the Tax Code of the Russian Federation);

·  income in the form of the amounts of accounts payable to budgets of the different levels written off or reduced according to the law of the Russian Federation (par. 1 of the subparagraph 21 of Art. 251 of the Tax Code of the Russian Federation);

·  miscellaneous expenses connected with production and sale, and other non-sale expanses made over the norms regulated by chapter 25 of the Tax Code of the Russian Federation.

2.12.5.  The information for reflection in accounting of constant differences is formed on the grounds of primary documents and registers of the tax accounting.

2.12.6.  Temporary difference (TD) - income and expenses forming the accounting profit (loss) in one accounting period; tax base under the profit tax - in another (other) tax period(s).

2.12.7.  Depending on the nature of influence on taxable profit time differences are divided into:

·  deductible temporary difference (DTD);

·  taxable temporary difference (TTD).

2.12.8.  Deductible temporary difference (DTD) results in formation of the deferred profit tax (deferred tax asset - DTA), which should reduce the amount of profit tax subject to payment in the budget in the following accounting periods.

2.12.9.  For the purposes of formation of accounting and tax profit, the following deductible temporary difference is accepted:

·  in case of sale of item of fixed assets application of different rules of recognition for the purposes of accounting and purposes of taxation of the residual cost of items of fixed assets (par.3. of Art. 268 of the Tax Code of the Russian Federation);

·  excessive paid profit tax, the amount of which is not returned, but is accepted to offset at formation of taxable profit in the period following the accounting or subsequent accounting periods;

·  loss transferred to the future, which is not used for reduction of profit tax in the accounting period, but which will be accepted with a view of the taxation in the subsequent accounting periods;

·  other similar differences.

2.12.10.  The information for reflection in accounting of deductible temporary difference is formed on the basis of primary documents and registers of the tax account.

2.12.11.  Taxable temporary difference (TTD) results in formation of the deferred profit tax (deferred tax obligation - DTO), which should increase the amount of profit tax subject to payment to the budget in the following accounting periods.

2.12.12.  For the purposes of formation of accounting and tax profit, the following deductible temporary difference is accepted:

·  difference, which was developed at formation of cost of fixed assets for the purposes of the accounting and tax account (sum differences, registration of property and miscellaneous expenses, which were not accounted at formation of cost of depreciated property for the purposes of the taxation);

·  application of different procedure of recognition of expenses in the accounting and tax account on overalls, which useful life exceeds 12 months according to the norms of issue.

2.12.13.  The information for reflection in accounting of deductible temporary difference is formed on the basis of primary documents and registers of the tax account.

2.12.14.  Amount of the current profit tax is determined by the Company basing on data formed in the accouting report,

2.12.15.  Amount of profit tax determined basing on accouting profit (loss) and reflected in accouting report irrespective the amount of taxable profit (loss) is conventional expense (conventional income) on profit tax.

2.12.16.  Conventional expense (conventional income) on profit tax is equal to the amount determinable as miltiplication of accounting profit formed within the reporting period by profit tax rate determined by the Law on taxes and duties of the Russian Federation and existing for the reporting date.

2.12.17.  Conventional expense (conventional income) on profit tax is recorded in the accounting report on a separate sub-account on accounting of conventional expenses (conventional income) on profit tax to the account on profir and loss recording.

2.12.18.  Profit tax for taxation purposes determinable basing on the amount of conventional expense (conventional income), which was adjusted by the amount of permanent tax liability (asset), increased or reduction of deferred tax asset and deferred tax liability of the reporting period is considered to be the current profit tax.

2.12.19.  If there are no permanent differences, deductible temporary differences and taxable temporary differences resilting in permanent tax liabilities (assets), deferred tax assets and deferred tax liabilities, conventional expense on profit tax is equal to the current profit tax.

2.12.20.  At this the amount of the current profit tax should comly with the amount of calculated profit tax recorded in tax return on profit tax;

2.12.21.  The amount of extra-pay (overpay) of profit tax connected with errors (distortions) revealed in the previous reporting (tax) periods, but which does not influence on the current profit tax of the reporting period, is reflected as a separate item of the Profit and Loss Statement (next to the current profit tax).

2.13.  Segment information

The Company does not disclose segment information in the annual accounting reporting.

2.14.  Events occuring after the reporting date

2.14.1.  Event occurring after the reporting date is the fact of business activities, which influences or can influence on the financial situation, movement of monetary funds or results of activity of the organization, and which took place in the period between the accounting date and date of signing the accounting statements for the reporting year.

2.14.2.  Event occurring after the reporting date is announcement of annual dividends following the results of activity of the Company for the reporting year.

2.14.3.  Event occurring after the reporting date are:

­  the events confirming economic conditions existing as of the reporting date in which the organization conducted the activity

·  in accordance with the established procedure the announcement of a debtor of the organization bankrupt, if the procedure of bankruptcy has been already executed concerning this debtor as of the reporting date;

·  estimation of assets performed after the reporting date, the results of which prove steady and essential decrease in their cost determined as of the reporting date;

·  announcement of dividends by subsidiaries and dependent companies for the periods preceding the reporting date;

·  revelation of an essential error in accounting after the reporting date or infringement of the law at carrying out of activity of the organization, which result in distortion of the accounting statements for the reporting period.

­  the events testifying to economic conditions occurring after the reporting date in which the organization conducts the activity:

·  decision-making relating to reorganization of the organization;

·  acquisition of the enterprise as property complex;

·  reconstruction or planned reconstruction;

·  decision-making relating to issue of shares and other securities;

·  fire, accident, natural disaster or another extreme situation resulted in destruction of the significant part of assets of the organization;

·  termination of essential part of primary activity of the organization, if it could not be expected as of the accounting date;

2.14.4.  Event occurring after the accounting date is recognized to be essential, if without knowledge of it, users of the accounting reporting cannot authentically judge about the financial situation, cash flow or results of activity of the Company.

2.14.5.  Importance of the event occurring after the accounting date, the organization determines independently basing on the requirements of provisions of regulatory acts on accounting.

2.14.6.  At drawing up of the accounting reporting the Company estimates consequences of the event occurring after the accounting date in money terms. For estimation of consequences of the event occurring after the accounting date in money terms, the Company makes the corresponding calculation and provides acknowledgement of such calculation.

2.14.7.  Event occurring after the accounting date testifying the economic conditions, which arose after the accounting date, under which the organization conducts the activity, is disclosed in explanatory to the accounting balance sheet and profits and losses statement. Thus, no records in accounting (synthetic and analytical) are made within the reporting period.

2.14.8.  Annual dividends recommended or declared in accordance with the established procedure following the results of work of the organization for the reporting year are reflected in accounting in the same order.

2.14.9.  The information disclosed in explanatory to the accounting balance sheet and profit statement should include brief description of the event occurring after the accounting date and estimation of its consequences in money terms. If there is no opportunity to estimate the consequence of event occurring after the accounting date in money terms, the Company should specify this.

2.15.  ESTIMATED LIABILITY

2.15.1.  Estimated liability is an obligation of the Company with an uncertain quantity and (or) execution time.